Target’s turnaround gets shoppers back into stores
Target’s efforts to draw shoppers back into its stores are paying off.
Take Annabel Bernardo, who once bought trendy clothes at Target but cut back after she felt it lost its fashion edge.
Now, Bernardo, who lives in Rockville Center, Maryland, is back: “The store is looking much better. It’s looking more upscale.”
That Target has had five consecutive quarters of increases in a key sales measure suggests there are more shoppers like Bernardo, who are returning to the discounter that pioneered the concept of putting affordable, chic fashions under the same roof as groceries and toiletries.
That’s good news for Target, which had setbacks in recent years, including a major debit and credit card hack that hurt sales for several months and a misstep that led it to focus on groceries instead of the cheap chic fashions its customers craved.
The sales improvements come as Target continues a turnaround plan it started after it hired CEO Brian Cornell in 2014. As part of the plan, Target got rid of its money-losing Canadian operations and revamped its management team.
But the key to luring shoppers back has been changes in stores. Target has been updating its fashion, baby products and home decor. It’s overhauled the fit of its jeans, resulting in at least 10 percent sales growth. It’s also launched a plus-size collection for women, Ava & Viv, marking its first exclusive fashion line in over a decade.
And the discounter has worked on presentation, too. It’s been adding mannequins to display some clothes instead of hanging them or folding them on shelves. Additionally, it’s hired experts for most of its 1,800 locations to refresh stores with the best merchandise.
At the same time Target upgrades its stores and merchandise, the chain says it’s keeping prices low. To ensure that, the chain says it’s better using its large scale to negotiate prices with suppliers. For instance, for basics like sheets and towels, Target offers longer-term commitments with manufacturers, ordering for two years instead of every quarter, a move that cuts costs.
Experts say it will be key for Target to distinguish itself from other discounters while not being perceived as too pricey for its middle-class shoppers. The median household income of Target’s customers is $67,500, about $20,000 more than Wal-Mart’s customers, according to Kantar Retail, a market research firm.
“It’s a tricky balancing act,” said Craig Johnson, president of retail consultancy Retail Growth Partners.
The changes come after Target wrestled with uneven growth since the Great Recession. After decades of gaining popularity with shoppers who like the idea of buying trendy clothes and home decor at a discounter that also carries soap and toothpaste, Target faced challenges when the recession made shoppers more frugal.
The changes have helped boost sales at stores open at least a year, a key sales measure in the retail industry. In the third quarter, the latest data available, such sales in fashion, home, children and baby items increased more than 2.5 times the average 1.9 percent growth.
The focus on presentation has also paid off. Sales of clothing on mannequins at 1,400 of its stores were up 30 percent before the holidays. And home products with new displays in 262 stores are selling three or four times faster than the average for that area.
Target’s comeback year
Target is working to reclaim its cheap chic image. Here are some things it did in 2015:
■Last spring, Target launched a partnership with the Lilly Pulitzer brand to develop a limited-time only collection of 250 pieces for a fraction of the price of the Palm Beach designer’s original merchandise. The discounter says the collection garnered the most social media hits of Target’s limited-time collections, but it was fraught with challenges. The offer, which included $38 pink shift dresses and $25 beach towels, was wrought with long lines in stores and quick sellouts online within hours of the debut on April 19. Still, a lot of pundits described it as a success, not only because everything was quickly sold out but also because everyone was talking about the chain.
■Target teamed up with Vogue for the September issue to reimagine 15 iconic photographic images in the fashion bible’s pages dating back to the 1920s. Some of the looks included fur head wraps, oversized coats and black and white checkered pumps. People also could use a Shazam app, which uses image recognition technology, to see the original image or buy the featured item from Target highlighted in the 20-page advertising insert in Vogue.
■It launched Ava & Viv, a plus-size clothing collection for women. It marks the first new exclusive fashion line that Target has created in more than a decade.
■Target hired fashion designer Adam Lippes to create 50 items in home decor and fashion, including handbags and coats. It was part of an overall limited time only plaid theme collection of more than 360 items that included plaid Diet Coke bottles, shampoo bottles and special-issue Chapstick sets.
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